High School Belle Fell in Love with Me

Chapter 647: Chapter 275: Negotiations with NVIDIA (Part 3)

Zheng Yi realized that twenty million US dollars was indeed a bit stingy.

He had considerable authority and immediately decided, "The sponsorship fee can be increased to thirty million US dollars."

But Li Yang still shook his head, "It’s not just sponsoring the entire world competition, but spanning all PlayerUnknown’s Battlegrounds events. And this is just a small part; we need to promote your company’s products to users and be the only designated hardware for the game."

Zheng Yi remained silent this time because he found that Li Yang always had various excuses.

However, Aurora Studio indeed had the capital to negotiate terms now.

So he asked, "What kind of conditions does President Li think are suitable?"

Li Yang asked Bai Qing to bring over a document that he had prepared long ago.

He handed it to Zheng Yi, and after reading it, Zheng Yi was silent.

At first glance, he felt the amount was somewhat outrageous.

But after finishing it, he felt it was quite reasonable.

He didn’t immediately agree or refuse but asked, "President Li, if you can ensure the order quantity, we can discuss this. If not... your company’s offer is unacceptable for us."

Two hundred million US dollars a year for sponsorship, although they can always enjoy the treatment of a main sponsor, and the company will strive to update the game to create demand for its products, the price is indeed too high.

According to this, he thought that within sixty million US dollars would still be reasonable.

However, in the document, Aurora Studio gave an estimated order quantity of ten million units a year.

This is quite enticing for NVIDIA...

It can directly help them clear out inventory.

Previously, NVIDIA’s various types of GPUs added up to just over ten million, with just over three million for GPUs with larger memory and computing power annually.

After this expansion, production capacity increased to ten million.

NVIDIA’s GPU profit margin is very high, with a sales price of 699 dollars, and the cost is just over a hundred dollars.

From the data alone, tripling production wouldn’t result in losses.

But they are outsourced from Taiwan, where there are requirements for production capacity; once an order is signed, even if it doesn’t sell, it must be produced.

Inventory costs are greater for them than production costs.

Li Yang said, "Order quantity is just an estimate; we can’t guarantee..."

Zheng Yi helplessly replied, "Then there’s no way. Your company’s demands are just too high, considering Seven-Colored Rainbow’s monthly sales are just a few tens of thousands, barely reaching a million over a year. A million-unit quantity doesn’t justify such expenditure."

Although a million units can still make money, it’s not much.

The profit is only three to four billion US dollars, and you take out two billion at once?

This doesn’t meet their business standards.

Moreover, he’s not desperate to get Li Yang to agree, especially since Aurora Studio has already prepared the version update, indicating they surely don’t want the collaboration to fail.

Sure enough, after his refusal, Li Yang looked a bit troubled.

"President Zheng, don’t rush to refuse, we can still talk seriously."

Zheng Yi smiled and said, "Of course!"

Li Yang continued, "The sponsorship fee of two hundred million US dollars can’t be reduced; if it did, Aurora Studio won’t find any profit margin and naturally won’t maintain the game diligently."

Zheng Yi asked, "Then what do you think, President Li?"

"Aurora Studio can establish a special department to sign orders with NVIDIA, ensuring sales of two million units a year. What does President Zheng think? Even if they don’t sell that many, we’ll take care of the remainder, but we require a certain price concession from you..."

Zheng Yi fell into thought.

Two million unit orders are indeed not bad, but he thought they definitely didn’t deserve the two hundred million sponsorship fee, let alone the demand for price concessions.

In his eyes, NVIDIA should always make the lion’s share of the profits, earning several times more than all other parties combined.

That arrogance is ingrained, and he even thinks it should be.

He slowly said, "If it’s three million units, I think we can collaborate. After all, Aurora Studio has spent considerable resources preparing for the new game version. I believe President Li also wants this collaboration to succeed. In my view, three million units is a very reasonable price, and we’re willing to offer a 5% price concession from the factory price."

Li Yang asked, "What about four million units?"

"10%!"

"How about five million units?"

"15%!"

For NVIDIA, the profit from one million units far exceeds a half-price discount.

For every increase of one million units, they’re effectively increasing sales by one-third, one-fourth, one-fifth...

The profit conceded is only 5%, 10%, 15%

These are two parallel upward lines, with the total profit always increasing; only after a 20% discount does the total profit reach its peak and stop increasing.

But he won’t agree to that much, just like that.

Li Yang thought for a moment and said, "President Zheng, even though you know we spent considerable resources preparing the update, this price concession isn’t enough for us to accept."

Zheng Yi said, "But your company also predicted one year’s sales at ten million units; do you now lack the courage to take on five million units?"

"Five million units are certainly possible, but I need a 30% concession!"

Li Yang, that’s impossible; NVIDIA has never been that cheap."

"Cheap? I think it’s already quite expensive... Let me treat you to a meal, President Zheng. If we can’t reach an agreement, I hope it doesn’t affect our relationship; we might still have chances to collaborate in the future."

Li Yang gave up on this negotiation, even though he knew graphics card prices would skyrocket next year, and NVIDIA’s inventory would be cleared by next summer.

He wasn’t only looking at current products; he wanted NVIDIA’s more powerful GPU computing power.

He’s merely using the game as cover, knowing they won’t be obtainable in a few years.